Let’s give the private health insurance marketplace a chance — ACA isn’t the answer

Author: Cindy Sovine-Miller - March 28, 2014 - Updated: March 28, 2014


Since the rollout of the Federal Health Insurance Exchange, failed technology, glitches and uncertainty have plagued the Obama administration. In Congress, both sides of the aisle are engaging in political theatrics around the Affordable Care Act. Currently the administration has authorized 19 delays, amendments and repeals to the law. There are a number of state and congressional measures moving forward right now that would have wide-reaching ramifications in the marketplace. First, delaying or repealing the individual mandate, which is a key piece to funding the new coverage mandates put in the law. Without it, insurance costs will skyrocket in the small employer and individual market. Second, there is also an attempt to repeal risk corridors (Insurance Bailouts), which would also directly result in increased costs to consumers.

Politicians in our own backyard are also attempting to drive up health insurance costs. In Colorado, the legislature passed HB14-1108, which creates additional mandated health benefits beyond those already required by the ACA. This legislation is now waiting on action from the Governor.

The problem with these proposals is that none of these do anything to control or reduce health care costs. We need to have a dose of reality injected into this conversation. Regardless of where one stands on the law, there is no going back to pre-ACA. Businesses and individuals are already accountable to its provisions. We need meaningful reforms, brought together with bipartisan effort and stakeholder input to replace the existing law. Should the private insurance markets fail, the inevitable conclusion is socialized medicine.

If the private markets are to have a chance at being successful, there are three components of the ACA that must work fluently with one another:

Access — The most widely supported provision (and the largest insurance cost driver) in the ACA is known as guaranteed issue in insurance industry terms, which requires insurance companies to accept everyone who applies for coverage regardless of their health status. Nobody can be denied coverage for any reason. It is so popular because nobody wants to be denied health insurance coverage. From a practical cost standpoint, imagine what would happen to prices for homeowners insurance if you were allowed to enroll for coverage while your house was on fire. There is very little discussion in Congress for changing this particular component of the ACA. There is broad based support on both sides of the aisle to keep this in place. However, with these new benefits come new, unpredictable costs.

Participation — The individual mandate was put in place on the principle that everyone must participate in the insurance pool in order to keep the marketplace viable and costs sustainable for all. Young, healthy individuals must sign up alongside those with health issues to balance the cost of coverage. The individual mandate in the ACA is weak, but does provide some incentive for individuals to be in the insurance pool.

Affordability — Though a person is guaranteed access to insurance, they still must be able to afford it. It is unknown what costs will look like in year two, three or later. A temporary safety valve known as “risk corridors” was built into the law and designed to keep premiums stable in the face of unavoidable uncertainty as the private markets transition to new models of coverage. The risk corridor is not a bailout, or a new idea. It has been there for insurers and for homeowners since 1968, when Congress established the National Flood Insurance Program. A similar mechanism is in place for crop insurance. In the ACA, these market stabilization mechanisms are only in place for three years.

These well-intentioned reforms further de-stabilize the markets. The further we drive up costs through policy decisions like these, the further we go down the slippery cost slope. One day we may find we no longer have footing. We have a lot of talent in our elected officials in this state. We need their focus and energy on reforms that will reduce costs, increase competition and give people the tools they need to manage their health care effectively.

Cindy Sovine-Miller is a political consultant, chair of the Colorado Association of Commerce & Industry’s Health Care Council and co-chair of Connect for Health Colorado’s Employer Workgroup. She can be reached at: cindy@sovinemiller.com.

Cindy Sovine-Miller

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